Coca-Cola Q4 net slips 22%

AGENCIESFeb 15, 2007, 01.28am IST

ATLANTA: Coca-cola, the world's largest soft-drink maker, said fourth-quarter profit fell less than analysts anticipated on increased demand for soda and healthier beverages such as bottled water in Asia and Latin America.

Net income declined 22% to $678 million, or 29 cents a share, the Atlanta-based company said in a statement, after Coca-Cola Enterprises, its largest bottler, reduced the value of its North American unit by $2.9 billion. Excluding that, Coca-Cola earned 52 cents.

The company sold more Coca-Cola in emerging markets including China and Russia, and ran new advertisements for its Georgia Coffee in Japan which won back customers after three quarters of decline. CEO Officer Neville Isdell promoted flavoured Dasani water to attract health-conscious consumers and win drinkers away from PepsiCo. The biggest drivers for Coke are outside the US, and that's where they've been focused," said Mariann Montagne, an analyst with Minneapolis-based Thrivent Asset Management.

The firm manages $100 billion in assets, including Coca-Cola shares.

Sales increased 6.9% to $5.93 billion. Net income was $864 million, or 36 cents, a year earlier after the company had additional costs to return overseas profit to the US under a tax holiday. Shares of Coca-Cola rose 39 cents to $48.60 at 7:50 am in trading before US exchanges opened after declining 29 cents to $48.21 in New York Stock Exchange trading on Tuesday. They rose 20% last year, the biggest gain since 1997, compared with a 5.9% gain for PepsiCo.

Coca-Cola Enterprises reduced the value of its North American unit by $2.9 billion amid lower soft-drink sales and higher costs for aluminium and high-fructose corn syrup used for sweetening. Coca-Cola, which owns 36% of the bottler, said profit was reduced by 23 cents a share. International case volume rose 6%, Coca-Cola said, while case volume in North America fell 2%. Coca-Cola promoted its namesake soda in fast-growing Latin markets.

Bottlers sold a greater number of chilled single-serve packages, which are more profitable than multipacks. The company ran new advertisements for Georgia Coffee in Japan, where it gets one-fifth of its profits. Previous marketing, part of an effort to appeal to younger drinkers, turned off some middle-aged consumers, the company has said.

European volumes were helped by the introduction of calorie-free Coca-Cola Zero soda in Great Britain, and the acquisition last year of Apollinaris, a German maker of mineral water. Mr Isdell, 63, has struggled to lift US soda sales as consumers cut back on sugary drinks in favour of water, tea, juice or sports drinks, categories led by PepsiCo's Aquafina, Lipton, Tropicana and Gatorade brands. Coca-Cola is is running more ads for Coca-Cola Classic, including its first Super Bowl spots in more than a decade. The US is its largest market, representing 22% of profits. — Bloomberg

Coca-Cola on February 1 agreed to buy Fuze Beverage to add juice, tea and energy drinks. Coca-Cola also changed a JV with Nestle last year to allow it to develop more coffee and green tea drinks on its own. — Bloomberg

The company also expanded Gold Peak bottled tea and introduced Enviga, a calorie-burning green tea drink. It plans to start selling bottled coffee drinks this summer under an agreement with Caribou Coffee volume for bottles and cans. — Bloomberg